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Making forecasts: How you think is more important than what you think

by Hamel Shah

Institutional investors often ask us, “Where do you see the market going from here?” With commercial real estate prices in effectively every major market in the world reaching new peaks following the global financial crisis, this is far from an academic question for institutional investors with clear mandates to deploy capital into real estate in a yield-starved world. Investing requires making decisions today based on expectations of what the future holds and, therefore, necessitates prediction — sometimes over multi-decade periods for institutions that set out to be long-term holders. Yogi Berra said it best, however: “It’s tough to make predictions, especially about the future.”

If you are reading this article waiting for our bold prediction on “where the market will go from here”, read no further. We are not making one!

At Azimuth, we spend a great deal of time thinking about forecasts to improve our analytical thought processes and, ultimately, our